Strategy, CE, Tech, Climate Change, Innovation, and Entrepreneurship

Wednesday, August 22, 2007

I've been attending conferences on Cold Fusion (also called Low Energy Nuclear Reactions and Lattice Assisted Nuclear Reactions) since the 10th International Conference (ICCF10) held in Cambridge, MA in 2003.

Google. In our "GOOD" scenario, revenue growth
merely slows--to 20% a year. (Google fans will argue that Google's
growth won't slow at all because advertisers have perfect visibility
into ROI, half of the business is international, etc. There are
counter-arguments to each of these points, but you can make your own
assumptions). Expense growth in this case also slows to 20%. Google
is a supertanker whose expenses are currently growing more than 65% per
year, so slowing expenses this much would be very "GOOD." In any case,
in this scenario, Google's margins hold and operating profits grow
20%--nice, but short of what Wall Street is probably expecting.

In our "BAD" Google scenario, revenue flattens, and the company
reigns in expense growth to 10% year (heroic). In this case, revenue
stays the same, but the operating margin drops from 29% to 21% and
operating profit drops by a third. (Imagine how Wall Street will react
to that). We won't tell you about the UGLY case--you can see for
yourself.

Thursday, August 09, 2007

Writing in the Telegraph (UK), Ambrose Evans-Pritchard has an article (top o' the hat to Farbers IP list) indicating that China is threatening to engage in what some might call "economic warfare."

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Saber rattling to be sure. Since we are a huge market for China, it's not clear that they would take steps that would adversely affect their own economy. China seems nothing if not pragmatic of late. Still, this news increases uncertainty all around.